Deferred pension

LongTimeLurker

Registered User
Messages
3
Hi all,

I recently left my occupational scheme and I'm presented with a few options.

I'm wondering if I choose to leave the fund with the current scheme as deferred pension, will I be able to do anything with it in the future like transferring it to a PRSA? Or would the fund be locked in there until retirement age?

Cheers
 

Kimmagegirl

Frequent Poster
Messages
232
My Defined Benefit plan was locked in until age 50 but only available from that age if the Trustees were willing to let it go.
 

SBarrett

Frequent Poster
Messages
3,047
You can transfer it at any time. It can be transferred to a PRSA, Buy Out Bond (if still around) or another occupational pension scheme. Or you can just leave it there.


Steven
www.bluewaterfp.ie
 

Conan

Frequent Poster
Messages
922
Depends whether you were in a DB or a DC scheme. If DC then yes you can transfer to a PRSA, Buy Out Bond or your new Employer Scheme.
If however your deferred pension is a DB , then you can only transfer if the previous scheme is willing to offer a Transfer Value. And even if they are, you need to consider whether the Transfer Value represents good value for the “guaranteed “ benefits forgone. You might need advice on that issue.
 
Last edited:

Conan

Frequent Poster
Messages
922
There is a Govt review underway at present in relation to “pension reform” including suggested simplification of the product range. This might include the elimination of BOB’s. But we will just have to await details.
 

Fergal19

Registered User
Messages
50
in fairness they should just eliminate everything bar the PRSA. On retirement you could stay in the PRSA so no need for ARF's etc. It would make things a lot easier.

They then could make contributions to the PRSA mandatory which would solve the mandatory pensions that we keep hearing about.
 

Marc

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Messages
1,041
Except of course that the rules around PRSAs are insane and the SORP is a joke and the costs are too high but yeah, let’s do away with everything else and put the Pensions Authority in charge
 

SBarrett

Frequent Poster
Messages
3,047
Is there a plan to eliminate BOBs Steven ?
Yes, the Pensions Authority wants to get rid of them. They will have to make changes to the PRSA first though. If you were in a pension scheme for over 15 years, you can't transfer to a PRSA, except in limited circumstances. That will have to go.

in fairness they should just eliminate everything bar the PRSA. On retirement you could stay in the PRSA so no need for ARF's etc. It would make things a lot easier.

They then could make contributions to the PRSA mandatory which would solve the mandatory pensions that we keep hearing about.
The pricing of a PRSA is far too rigid, with every contract having to be approved. This comes at a cost and time. The cost of PRSA contracts on the market are much higher than those of executive or personal pensions.

What the Pensions Authority need to do is get rid of allocation rates. That will see the older, high cost contracts being closed.

Steven
www.bluewaterfp.ie
 

Fergal19

Registered User
Messages
50
The PRSA would have to be tweaked for sure but it is by far the best vehicle for this! It won't happen though as too much vested interests. For example the PA want to get rid of BOB's. The only reason for this is that they don't receive a fee on them. The life companies don't want the push for PRSA's due to the pricing structure/ commission issues hence the reason for the unnecessary RAC still in existance. Then there are loads of other parties etc.

I don't mind allocation rates. Its a good and clear way to pay the advisor. For example I want to pay my advisor 3k for arranging a 100k investment. In that case I take a 97% allocation on the funds and the advisor gets paid the 3k.

Its commissions undisclosed is where the problem is at. ie where the client thinks or sold the product thinking that he is getting 100% allocation on his funds where in reality commission of 3% has been paid to someone else and only the balance of 100% is invested. In fact if this was disclosed and upfront I wouldn't have much of an issue with it either as some of the companies offer good deals and bargains can be had to entice in customers.

Its amazing that in 2019 a bigger issue isn't made of this.
 

fayf

Frequent Poster
Messages
38
There is a Govt review underway at present in relation to “pension reform” including suggested simplification of the product range. This might include the elimination of BOB’s. But we will just have to await details.
If they were eliminated, surely that would only apply to future BOB’s, not existing ones i assume ?
 

SBarrett

Frequent Poster
Messages
3,047
The PRSA would have to be tweaked for sure but it is by far the best vehicle for this! It won't happen though as too much vested interests. For example the PA want to get rid of BOB's. The only reason for this is that they don't receive a fee on them. The life companies don't want the push for PRSA's due to the pricing structure/ commission issues hence the reason for the unnecessary RAC still in existance. Then there are loads of other parties etc.

I don't mind allocation rates. Its a good and clear way to pay the advisor. For example I want to pay my advisor 3k for arranging a 100k investment. In that case I take a 97% allocation on the funds and the advisor gets paid the 3k.

Its commissions undisclosed is where the problem is at. ie where the client thinks or sold the product thinking that he is getting 100% allocation on his funds where in reality commission of 3% has been paid to someone else and only the balance of 100% is invested. In fact if this was disclosed and upfront I wouldn't have much of an issue with it either as some of the companies offer good deals and bargains can be had to entice in customers.

Its amazing that in 2019 a bigger issue isn't made of this.

With potential commissions as high as they are, there are plenty of brokers who won't disclose or will bury the fees. It's human nature where greed is involved and it is not restricted to personal finance. So why not just get the client to pay for the advice directly? They are paying for it through the management fee anyway.

There is also a lower disclosure requirement for company pensions than personal pensions as The Pensions Authority figured that if you run your own business you should have a greater knowledge of financial products (if I have a ltd and I walked people's dogs?!!). I have also seen Statements of Suitability with "fees are as per the policy quotation". Given the majority of people don't read the 100 pages of documents given to them, it's easy for a broker to hide fees yet meet their disclosure obligations.


Steven
www.bluewaterfp.ie
 

Fergal19

Registered User
Messages
50
With potential commissions as high as they are, there are plenty of brokers who won't disclose or will bury the fees. It's human nature where greed is involved and it is not restricted to personal finance. So why not just get the client to pay for the advice directly? They are paying for it through the management fee anyway.

There is also a lower disclosure requirement for company pensions than personal pensions as The Pensions Authority figured that if you run your own business you should have a greater knowledge of financial products (if I have a ltd and I walked people's dogs?!!). I have also seen Statements of Suitability with "fees are as per the policy quotation". Given the majority of people don't read the 100 pages of documents given to them, it's easy for a broker to hide fees yet meet their disclosure obligations.


Steven
www.bluewaterfp.ie
This is one of the big issues with the industry. Its accepted practice that brokers won't disclose fees. This shouldn't be the way!

Also, if the client pays for it directly out of his pocket its from after tax money while if deducted from the pension fund as an allocation its paid from pre tax money. This in effect halves the fee?
 

SBarrett

Frequent Poster
Messages
3,047
It can be taken directly from the premium.

...and people always pay fees from after tax money, accountant, dentist, doctor, solicitor etc.
 
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